Tuesday, July 24, 2018

Neogen's Story Continues To Work

Neogen (NEOG) is the sort of stock that could make value investors tear their hair out in frustration. No question that this is a very good company – basically a “one-stop shop” for food safety and food animal products, Neogen has produced mid-teens long-term revenue growth, 20%-plus free cash flow growth, and an annualized return of over 26% over the past decade, despite almost always sporting exceptionally robust valuation multiples and not hitting its own operating margin goals for five straight years.

Having followed this company for around 20 years, I no longer spend as much time trying to make sense of the valuation – Neogen lives in its own little “pocket dimension” of the market when it comes to valuation, and that either works for you or doesn’t. Fundamentally, though, the company continues to improve its food safety, animal care, and genomics offerings, and as more of the developing world adopts more rigorous food safety testing, I believe Neogen’s market opportunity should continue to grow.

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Neogen's Story Continues To Work

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